Romania

Policy Interest Rate

5.5
percent
Jul 03Jul 04Jul 05Jul 06Jul 07Jul 08Jul 09Jul 10Jul 11Jul 12Jul 13Jul 14Jul 15Sep 16Nov 17Jan 19Feb 20Apr 21Aug 220.0006.00012.0018.0024.00
  • Romania
  • Global Median
Source: IMF

Definition of Policy Interest Rate

The interest rate which best captures the monetary authorities' policy intentions. Different countries have different policy interest rates. The most common are the overnight lending rate, discount rate and repurchase rate (of different maturities). In the USA the policy rate is the federal funds rate. The federal funds rate is the interest rate at which depository institutions trade federal funds (balances held at Federal Reserve Banks) with each other overnight. The federal funds rate is essentially determined by the market but is influenced by the Federal Reserve through open market operations to reach the federal funds rate target. In the Euro area the policy rate is the main refinancing operations rate. The main refinancing operations (MRO) rate is the interest rate banks pay when they borrow money from the ECB for one week. When they do this, they have to provide collateral to guarantee that the money will be paid back. The policy interest rates determine the levels of the rest of the interest rates in the economy, since it is the price at which private agents (mostly private banks) obtain money from the central bank.

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